Trade

Trump Admits China Isn’t Making New Farm Purchases For Him

Written by SK Ashby

China has not followed through on their non-existent pledge to make new purchases of American agricultural products, but you don't have to take our word for it.

You don't even have to take the word of customs data, if you don't trust that sort of thing. You can just take Trump's word for it if you prefer and Trump says China isn't following through on the pledge he made.

There are "no signs" that China is making new purchases, Trump says.

And why not?

Reuters reports that the Chinese government offered a select group of Chinese importers a chance to import a limited amount of American soybeans without tariffs and they have not accepted the offer, at least not yet.

China has yet to make the large agricultural purchases U.S. President Donald Trump and other top officials say were promised when Trump and Chinese President Xi Jinping met at the G20 summit in Osaka, Japan a month ago to restart stalled trade talks.

The U.S. Department of Agriculture said on Monday nine bulk U.S. soybean shipments carrying about 600,000 tonnes were inspected for export to China in the week ended July 25, the most for a single week since mid-February. One corn cargo was also shipped last week, the data showed.

The soy shipments were part of a series of about 14 million tonnes in goodwill purchases made by Chinese state-owned firms before trade talks broke down in May, U.S. traders and analysts said. [...]

But the USDA has not confirmed any new soy purchases by China since the G20, even after China last week offered five companies a chance to buy limited amounts of U.S. soy tariff-free. USDA rules require exporters to report any grain sales of more than 100,000 tonnes to a single destination within 24 hours.

It should concern the farm community that Chinese importers may not necessarily be interested in buying American farm goods even if they're given an opportunity to do so with no tariffs on it.

There's a risk and maybe even a high probability that things will not return to normal when Trump's trade war is over. There's a chance that Chinese businesses will permanently replace American farm goods with goods from Brazil, for example. It seems unlikely that China will ever again import up to 25 million tonnes of American soybeans each year. It took an army of lobbyists and marketing managers decades to develop access to markets and Trump destroyed it in a year.

Financial markets reacted negatively to Trump's admission this morning, even though all he did was reiterate what we already know.